Download chapter one Advertising Today and How We Got Here

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part 1
An Introduction
to Advertising
chapter one
Advertising Today
and How We Got Here
Objectives
To define advertising and review its evolution. You will learn what advertising is and what it
is not; the role advertising plays in business and our economy; how advertising evolved to the
position it occupies today; and the impact that advertising has on our society.
After studying this chapter, you will be able to:
* Define advertising and differentiate it from other forms of marketing
communications.
* Explain the role advertising plays in business and marketing.
* Explain the importance of advertising in a free market economy.
* Discuss how advertising evolved with the history of commerce.
* Explore the impact of advertising on society yesterday, today, and
tomorrow.
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At the turn
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of the nineteenth century, a
Altoids launched its first major marketing cam-
small confectionery firm in London created a
paign in its 215-year history. With a budget far
recipe for an “exceptionally strong” lozenge
below what its competitors were spending, Altoids
intended to relieve intestinal discomfort.1 The
and its ad agency, Leo Burnett Chicago, developed
name of these miracle lozenges was Altoids, and
an advertising strategy that would prove to be
although the reason for their consumption has
deceivingly simple yet amazingly effective. Accord-
changed from fighting stomach pains to combat-
ing to its research, Altoids found that its customers
ing bad breath, the tradition of taking a couple
tended to be young, urban, socially active, and cul-
after meals has stayed the same.
turally aware—but somewhat difficult to reach via
Yet, contrary to its lengthy history, the success
conventional advertising media.
of Altoids as we know it today has been a recent
The solution: place advertisements outdoors,
occurrence—just over the past decade. There are
in locations nobody could miss—on billboards, in
several reasons for this. First, the brand’s price was
bus shelters, phone booths, and subway cars. Most
three times higher than competitive products. Sec-
importantly, the ads themselves were great—they
ond, it had achieved only very narrow distribution.
were highly creative and just as simple as the
Finally, it suffered from extremely low awareness
media that carried them. Focusing on the product’s
due to virtually no advertising. As a result, Altoids
unique, exceptionally strong flavor and its one-of-
faced very limited success before the mid-1990s.2
a-kind tin packaging, the ads generally featured
Following a series of mergers and acquisitions
an Altoids’ signature tin, with a simple, humorous
in the consumer products industry—which resulted
catch phrase at the bottom. The ads were indica-
in Altoids being owned by Callard & Broward-
tive of the mint—simple, clean, and fresh. (For
Suchard, a subsidiary of Kraft General Foods—
more Altoids ads, see the Portfolio Review on the
change finally, and suddenly, came about. In 1995,
Essentials of Contemporary Advertising Web site.)
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part 1 An Introduction to Advertising
Within a year, studies showed a substantial increase in brand awareness and consumption. Moreover, the brand jumped from number six in U.S. breath mint ranking
to number one in 2001.3
The moral of this story is simple: good advertising can have a curiously strong
effect on a brand’s success. Success stories like this are what encourage companies and
organizations in the United States to spend over $245 billion annually on advertising,
and they will likely continue to spend even more in the future.4
Altoids: “Invented in 1780. Properly marketed 215 years later.”5
What Is Advertising?
As a consumer, you are exposed to hundreds and maybe even thousands of
commercial messages every day. They may appear in the form of billboards like
the Altoids campaign, or in the form of newspaper ads, TV commercials,
coupons, publicity, event sponsorships, telemarketing calls, or even e-mails.
These are just a few of the many communication tools that companies and
organizations use to initiate and maintain contact with their customers, clients,
and prospects. You may simply refer to them all as “advertising.” But, in fact,
the correct term for these various tools is marketing communications. And
advertising is just one type of marketing communications.
So, then, what is advertising?
At the beginning of the twentieth century, Albert Lasker, who today is generally regarded as the father of modern advertising, owned a prominent advertising agency, Lord & Thomas. At the time, he defined advertising as
“salesmanship in print, driven by a reason why.”6 But that was long before the
advent of radio, television, or the Internet. The nature and scope of the business
world, and advertising, were quite limited. A century later, our planet is a far different place. The nature and needs of business have changed, and so have the
concept and practice of advertising.
Today, definitions of advertising abound. Journalists, for example, might
define it as a communication, public relations, or persuasion process; businesspeople see it as a marketing process; economists and sociologists tend to focus
on its economic, societal, or ethical significance. And some consumers might
define it simply as a nuisance. Each of these perspectives has some merit, but
for now we’ll use the following functional definition:
Advertising is the structured and composed nonpersonal communication of
information, usually paid for and usually persuasive in nature, about products
(goods, services, and ideas) by identified sponsors through various media.
Let’s take this definition apart and analyze its components. Advertising is,
first of all, a type of communication. It is actually a very structured form of
communication, employing both verbal and nonverbal elements that are composed to fill specific space and time formats determined by the sponsor.
Second, advertising is typically directed to groups of people rather than to
individuals. It is therefore nonpersonal, or mass communication. These people
could be consumers, who buy products like Altoids for their personal use. Or
they might be businesspeople who would buy large quantities of Altoids for
resale in their stores.
Most advertising is paid for by sponsors. GM, Wal-Mart, Coca-Cola, and your
local fitness salon pay the newspaper or the radio or TV station to carry the ads
you read, see, and hear. But some sponsors don’t have to pay for their ads. The
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chapter one Advertising Today and How We Got Here
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American Red Cross, United Way, and
American Cancer Society are among the
many national organizations whose
public service announcements
(PSAs) are carried at no charge because
of their nonprofit status. Likewise, a
poster on a school bulletin board promoting a dance is not paid for, but it is
still an ad—a structured, nonpersonal,
persuasive communication.
Of course, most advertising is
intended to be persuasive—to win
converts to a product, service, or idea.
Some ads, such as legal announcements, are intended merely to inform,
not to persuade. But they are still ads
because they satisfy all the other
requirements of the definition.
In addition to promoting tangible
goods such as oranges, oatmeal, and
Even nonprofits feel the squeeze to bring in revenue to operate. This New Zealand
olive oil, advertising helps publicize advocacy group won a Bronze Lion at Cannes for its creative use of billboard advertising
the intangible services of bankers, to seek donations for establishing a nationwide burn center.
beauticians, bike repair shops, bill
collectors, and the telephone company. Increasingly, advertising is used to
advocate a wide variety of ideas, whether economic, political, religious, or
social. In this book the term product encompasses goods, services, and ideas.
An ad identifies its sponsor. This seems obvious. The sponsor wants to be
identified, or why pay to advertise?
Finally, advertising reaches us through a channel of communication referred to
as a medium. An advertising medium is any paid means used to present an ad to its
target audience. Thus, we have radio advertising, television advertising, newspaper
ads, and so on. When you tell somebody how good Altoids taste, that’s sometimes
called word-of-mouth (WOM) advertising. Although WOM is a communication
medium, it’s not an advertising medium. It’s not structured, or openly sponsored, or
paid for. Historically, advertisers have used the traditional mass media (the plural of
medium)—radio, TV, newspapers, magazines, and billboards—to send their messages. But today technology enables advertising to reach
us efficiently through a variety of addressable media (like
direct mail) and interactive media (like the Internet).
Describe the six components that
Advertisers also use an increasing variety of other nontradefine advertising.
ditional media such as shopping carts, blimps, and
videocassettes to find their audience.
The Role of Advertising in Business
In Chapter 5, we will discuss in more detail how advertising communicates for
the purpose of informing and persuading consumers, but first let’s consider
advertising’s role in business. Every business organization performs a number of
diverse activities. Management typically classifies these activities into three
broad functional divisions:
•
Operations (production/manufacturing)
•
Finance/administration
•
Marketing
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part 1 An Introduction to Advertising
Of all the business functions, marketing is the only one whose primary role
is to bring in revenue. Without revenue, of course, a company cannot pay its
employees’ salaries or earn a profit. So marketing is very important.
What Is Marketing?
Over the years, the concept of marketing has evolved based on the supply of
and demand for products. Because we need to understand marketing as it
relates to advertising, we define the term as follows:
Marketing is the process of planning and executing the conception, pricing,
distribution, and promotion of ideas, goods, and services to create exchanges
that satisfy the perceived needs, wants, and objectives of individuals and
organizations.7
We will devote all of Part 2 to the subject of marketing and consumer
behavior. What’s important to understand now is that marketing is a process—a
series of actions that take place sequentially—aimed at satisfying customer
needs profitably. This process is typically broken down into the 4 Ps of the
marketing mix: developing products, pricing them strategically, distributing
them so they are available to customers at appropriate places, and promoting
them through sales and advertising activities (see Exhibit 1–1). The ultimate goal
of the marketing process is to earn a profit for the firm by consummating the
exchange of products or services with those customers who need or want them.
And the role of advertising is to promote—to inform, persuade, and remind
groups of customers, or markets, about the need-satisfying value of the company’s goods and services.
Advertising and the Marketing Process
Advertising helps the organization achieve its marketing goals. So do market
research, sales, and distribution. And these other marketing specialties all have
an impact on the kind of advertising a company employs. An effective advertising specialist must have a broad understanding of the whole marketing process
in order to know what
type of advertising to use
Exhibit 1–1
in a given situation.
Advertising is just one of several activities that fall under the promotion component of the
Companies and organimarketing mix.
zations use many different
types of advertising, depending on their particular
Marketing Strategy
marketing strategy. The
Define a target market and marketing mix
marketing strategy will help
determine who the targets
of advertising should be, in
Distribution
Product
Price
Promotion
what markets the advertis(Place)
ing should appear, and
what goals the advertising
should accomplish. The
Personal
Sales
Direct
advertising strategy, in turn,
Advertising
Selling
Promotion
Marketing
will refine the target audience and define what
response the advertiser is
Public
Sponsorships
seeking—what that audiRelations
and Events
ence should notice, think,
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chapter one Advertising Today and How We Got Here
What is the goal of marketing and
what role does advertising play in
achieving that goal?
Economics: The Growing
Need for Advertising
Economics has driven the growth of advertising since its earliest beginnings
and has made it one of the hallmarks of the free enterprise system. As English
historian Raymond Williams said, “Advertising is the official art of capitalist
society.”8
Today, business—and advertising—are undergoing the most dramatic
changes in history. To understand the nature of these changes and why they’re
taking place, we need to look at how advertising has evolved. We’ll explain
how the changing economic environment has influenced the evolution of
advertising through the centuries. Then, in Chapter 2, we’ll look at how advertising itself influences the economy and society and, as a result, is often an
object of controversy and criticism.
Principles of Free Market Economics
Our economy is based on the notion of competition. While there is no such
thing as perfect competition, there are four fundamental assumptions of free
market economics that our market-driven society believes in and strives to
achieve:
1.
Self-interest. People and organizations tend to act in their own selfinterest. By their very nature, people are acquisitive. They always
want more—for less. Therefore, open competition between selfinterested sellers advertising to self-interested buyers naturally leads
to greater product availability at more competitive prices.
2.
Complete information. Access by buyers and sellers to all
information at all times about what products are available, at what
quality, and at what prices leads to greater competition and lower
prices for all. (This is why attorneys are now allowed to advertise.)
3.
Many buyers and sellers. Having a wide range of sellers ensures that
if one company does not meet customer needs, another will be available to capitalize on the situation by producing a more marketresponsive product. Similarly, having a wide range of buyers ensures
that sellers can find customers who are interested in the unique
products they are able to produce at a fair price. (This is why we
have antitrust laws.)
4.
Absence of externalities (social costs). Sometimes the sale or
consumption of products may benefit or harm other people who are
not involved in the transaction and didn’t pay for the product. In
these cases, the government may use taxation and/or regulation to
compensate for or eliminate the externalities. (This is why there are
restrictions and requirements placed on tobacco advertisers.)
Now, given these basic assumptions, let’s see how advertising fits into the
scheme of a free market economy.
CONCEPT
CHECK
and feel. We will discuss the development of marketing,
advertising, and media strategies later in the text.
But first, we need to understand the economic
dimension of advertising and how advertising has
evolved as both an economic and a societal tool.
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part 1 An Introduction to Advertising
Functions and Effects of Advertising
in a Free Economy
For any business, advertising may perform a variety of functions and, when executed correctly, its effects may be dramatic. To see how this works, let’s go back
to the beginnings of the Eastman Kodak Company.
When George Eastman first developed his plans for transparent roll film and
subsequently the box camera, he realized he also had to think up a new, distinctive name for the company. Eastman explained, “I devised the name myself.
The letter ‘K’ had been a favorite with me—it seems a strong, incisive sort of letter. It became a question of trying out a great number of combinations of letters
that made words starting and ending with ‘K.’ The word ‘Kodak’ is the result.”
Once Eastman decided on a name he felt would distinguish his company and its
products in the minds of consumers, he quickly registered the word “Kodak” as
a trademark with the U.S. Patent and Trademark Office. Shortly thereafter, Eastman selected the distinctive yellow packaging that is now widely associated
with Kodak throughout the world—an association that has become one of the
company’s more valued assets. This demonstrates one of the most basic functions of branding as well as advertising: to identify products and to differentiate them from others.
Once Eastman and his partners had named the product and the company, they
began running ads to promote the Kodak camera, to tell people how it worked,
and to publicize where they could get one. Here is another basic function of
advertising: to communicate information about the product, its features, and its
place of sale. (The functions and effects discussed here are listed in Exhibit 1–2.)
Prior to the introduction of Kodak film, photography had been the purview
of dedicated professionals or wealthy amateurs. It was Eastman’s intention to
change that. Toward the turn of the twentieth century, Kodak’s ad campaign
sought to make the camera a part of daily life—something everyone could
enjoy. Hence the introduction of the $1.00 Kodak Brownie camera and Kodak’s
ambitious ad campaign covering a wide variety of media. By June 1900, the
magazines carrying Brownie advertisements reached a combined circulation of
6 million readers. The Brownie campaign, which lasted until the early 1960s,
changed the perception of who could use a camera and the ease with which
film could be developed. To us, this campaign demonstrates another function of
advertising: to induce consumers to try new products and to suggest reuse.9
Over the past century, as the camera became an integral part of everyday
life in the United States, Kodak conducted many simultaneous campaigns outside the country to increase global awareness as well. Through various activities, such as its sponsorship of the Olympic Games where it supplied free
cameras and film to participating media personnel, Kodak succeeded in accomplishing yet another function of advertising: to stimulate the distribution of a
Exhibit 1–2
product—in this case, on a global level.
Functions and effects of advertising
Since the introduction of the first Kodak box camera in 1888, technology
as a marketing tool.
has dramatically changed the field of photography, and Kodak has been at the
forefront of this progress. The result of these advances has
been to make basic photography simpler and more accessible
■ To identify products and differentiate them from others.
to the masses while improving the overall quality for both
■ To communicate information about the product, its
features, and its place of sale.
amateur and professional photographers alike. By effectively
■ To induce consumers to try new products and to suggest
communicating the news of these advancements to its cusreuse.
tomers, Kodak achieved another of the most important func■ To stimulate the distribution of a product.
tions of advertising: to increase product use.
■ To increase product use.
In a free market economy, when one company starts to
■ To build value, brand preference, and loyalty.
make significant profits, other companies immediately jump
■ To lower the overall cost of sales.
in to compete. Over the years, to battle the growing compet-
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itive threat, Kodak has consistently funded ongoing marketing communications
campaigns aimed at accomplishing yet another function of advertising: to build
value, brand preference, and loyalty.
Today Kodak offers a myriad of products ranging from simple film roll cameras, to disposable cameras, to high-tech digital cameras, to printers and scanners, as well as its ubiquitous Kodak film processing service. Its advertising,
though, such as its current campaign, “Share Moments. Share Life,” has always
strived to unify the products under a common voice and a common theme:
quality, reliability, and trust.
For more than 100 years, the Eastman Kodak Company has used a variety
of media to communicate advertising messages to very divergent audiences.
Why? To achieve the most significant function of advertising: to lower the cost
of sales. For the cost of reaching just one prospect through personal selling,
companies can reach thousands of people through media advertising.
Now, considering this brief synopsis of Kodak
history, how does Kodak’s advertising fit with the
basic assumptions of a free market economy? Has
Kodak’s advertising helped make photography availDescribe the seven basic functions of
able to more people at lower cost? Has it contributed
advertising.
important information to people? Has the freedom to
advertise contributed to the competitive environment?
What externalities might have had a positive or negative impact on Kodak’s efforts to market photographic
supplies?
Perhaps you can see from this one example how advertising contributes to a
free economy. But if it’s so good, then why is advertising considered a twentiethcentury phenomenon? Why wasn’t it developed and used for the last several
thousand years of recorded history? Or was it?
To get a full sense of what advertising really is today, we need to understand where it has come from, how and why it grew to be so large, and what
An early form of advertising. Until the
the forces are that drive it.
advent of public schooling, most people
The Evolution of Advertising as an Economic Tool
Thousands of years ago, most people were engaged in hunting, herding, farming, or handicrafts. To make products, they used primitive hand tools. Humans
devoted most of their efforts to meeting basic survival needs: food, clothing,
shelter. They lived in small, isolated communities where artisans and farmers
bartered products and services among themselves. Distribution was limited to
how far vendors could walk and “advertising” to how loud they could shout.
Because goods weren’t produced in great quantity, there was no need for
advertising to stimulate mass purchases. There were also no mass media available for possible advertisers to use. Notwithstanding, archaeologists have found
evidence of advertising among the Babylonians dating back as far as 3000 BC
(see Exhibit 1–3).
The Preindustrial Age
As the marketplace grew larger and became more complex, the demand for
products increased, and the need for advertising slowly developed. At first, merchants hung carved signs in front of their shops so passersby could see what
products were being offered. Most people couldn’t read, so the signs often used
symbols, such as a boot for a cobbler. This period was called the preindustrial
age, and, for Western civilization, it extended from the beginning of recorded
history to roughly the start of the nineteenth century.10
couldn’t read—so signs featured
symbols of the goods or services for
sale, such as the jerkin on this tailor’s
sign in Williamsburg, Virginia.
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part 1 An Introduction to Advertising
3000 BC–AD 1
AD
3000 BC. Written
advertisement offering
“Whole gold coin” for
runaway slave “Shem.”
500 BC. Political and trade
graffiti on Pompeii walls.
AD 1. First uppercase lettering
appears on Greek buildings.
1600–1799
1800–1899
1455. First printed Bible.
1472. First printed ad in
English tacked on London
church doors.
1544. Claude Garamond, first
“typefounder,” perfects a
roman typeface that bears his
name and is still used today.
1650. First newspaper ad
offers reward for stolen horses.
1662. London Gazette offers
first advertising supplement.
1704. First ads in America
published in the Boston
Newsletter.
1729. Ben Franklin is first to
use “white space” and
illustration in ads.
1785. Widespread use of
advertising and long print
runs become possible.
1841. Volney B. Palmer
becomes first “newspaper
agent” (advertising agent) in
America.
1844. First magazine ad runs.
1869. Francis W. Ayer founds
ad agency bearing his father’s
name, N. W. Ayer & Sons, in
Philadelphia. He initiates first
“for commission” ad contract
(1876), first market survey for
an ad (1879), and first on-staff
creative services (art in 1890,
copywriting in 1892).
1888. Printers’ Ink is first U.S.
publication for ad profession.
1900–1919
1920–1939
1940–1959
1960–1969
1900. Psychologists study the
attention-getting and
persuasive qualities of
advertising.
1900. Northwestern
University is first to offer
advertising as a discipline.
1903. Scripps-McRae League
of Newspapers appoints ad
censor, rejects $500,000 in ads
in first year.
1905. First national ad plan is
for the “Gillette Safety
Razor.”
1911. First “truth in
advertising” codes are
established by what is
now called the American
Advertising Federation (AAF).
1920s. Albert Lasker, father
of modern advertising, calls
advertising “salesmanship in
print.” First ad testimonials by
movie stars appear. Full-color
printing is available in
magazines.
1922. First radio ad solves
radio’s need for financing.
1924. N. W. Ayer produces first
sponsored radio broadcast, the
“Eveready Hour.”
1930. Advertising Age
magazine is founded.
1938. Wheeler-Lea
amendments to FTC Act of
1938 grant FTC further power
to curb false ad practices.
1946. America has 12 TV
stations broadcasting to the
public.
1947. Lanham Trademark Act
protects brand names and
slogans.
1948. 46 TV stations are
operating and 300 others are
awaiting FCC approval.
1950. First political ads are
used on TV by Gov. Dewey of
New York.
1950s. David Ogilvy’s
“Hathaway man” and
“Commander Whitehead”
become popular ad personae.
1960s. Doyle Dane Bernbach’s
“Think small” ad for American
Volkswagen becomes one of
the most famous ads of the
decade, establishing a strong
market position for the
smallest European import. The
agency’s slogan for Avis,
“We’re only No. 2, so we try
harder” is also very successful.
New York’s Madison Avenue
becomes known worldwide as
the center of the advertising
world and features the best in
advertising creativity.
1970–1979
1980–1989
1990–1999
2000–2005
1971. Armed services begin
first advertising for the new
“all-volunteer” military (“Be
all that you can be in the
Army”).
1972. The Ad Age article
“Positioning: The Battle for
Your Mind” by Al Ries and
Jack Trout details the strategy
of positioning that dominates
the 1970s.
1973. Oil shortages begin
period of “demarketing,” ads
aimed at slowing demand.
1970s (late). Growth in
self-indulgence, signified by
popularity of self-fulfillment
activities, spurs some agencies
into making infomercials.
1980s. The “me” decade
begins (baby boomers are
indulgent but want social
accountability). Ad agency
megamergers take place
worldwide.
1982. First edition of
Contemporary Advertising is
published.
1984. The Internet
(government controlled since
1973) is turned over to the
private sector.
1986. Marketing Warfare
by Al Ries and Jack Trout
portrays marketing in terms
of classic warfare manual
written by General Clausewitz
in 1831.
1990s. Early part of decade
experiences recession.
Marketers shift funds from
advertising to sales
promotion, leaving major
agencies to fail or merge.
1994. Media glut leads to
market fragmentation;
network TV is no longer sole
medium for reaching total
marketplace. Ad professions
adopt integrated marketing
communications (IMC) as the
new strategy to build market
relationships.
2000. The Internet is the
fastest-growing new ad
medium since TV, with 400
million users. Advertising is
evolving into a two-way
medium.
2005. As the spread of
personal video recorders and
video on demand allows more
television viewers to bypass
advertisements, product
placement is gaining favor.
The number of placements on
television shows doubles
every quarter.
Exhibit 1–3
Timetable of advertising history.
500–1599
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During the preindustrial age, several important developments enabled the
eventual birth of modern advertising. The Chinese invented paper and Europe had
its first paper mill by 1275. In the 1440s, Johannes Gutenberg invented the printing
press in Germany. The press was not only the most important development in the
history of advertising, and indeed communication, but it also revolutionized the
way people lived and worked.
Before the printing press, most people were illiterate. Only monks and
scholars could read and write; the average person had to memorize important
information and communicate orally. Because oral communication could not be
substantiated, people lived without documentable facts. And because dialects
varied from region to region, most news never traveled more than 50 miles.
The introduction of printing allowed facts to be established, substantiated,
recorded, and transported. People no longer had to rely on their memories. Movable letters provided the flexibility to print in local dialects. The slow hand transcription of the monks gave way to more rapid, volume printing by a less select
group. Some entrepreneurs bought printing presses, mounted them in wagons,
and traveled from town to town, selling printing. This new technology made possible the first formats of advertising—posters, handbills, and signs—and, eventually, the first mass medium—the newspaper. In effect, the cry of the vendor could
now be multiplied many times and heard beyond the immediate neighborhood.
In 1472, the first ad in English appeared: a handbill tacked on church doors in
London announcing a prayer book for sale. Two hundred years later the first
newspaper ad was published, offering a reward for the return of 12 stolen horses.
Soon newspapers carried ads for coffee, chocolate, tea, real estate, medicines, and
even personal ads. These early ads were still directed to a very limited number of
people: the customers of the coffeehouses where most newspapers were read.
By the early 1700s, the world’s population had grown to about 600
million people, and some major cities were big enough to support It wasn’t until 1729 that Ben Franklin, innovator of
larger volumes of advertising. In fact, the greater volume caused a shift advertising art, made ads more readable by using
in advertising strategy. Samuel Johnson, the famous English literary fig- larger headlines, changing fonts, and adding art.
ure, observed in 1758 that advertisements were now so numerous that This 1767 ad announces the availability of Stage
they were “negligently perused” and that it had become necessary to Waggons to carry passengers from Powles Hook
Ferry to Philadelphia.
gain attention “by magnificence of promise.” This was the beginning of
puffery in advertising.
In the American colonies, the Boston Newsletter began carrying ads
in 1704. About 25 years later, Benjamin Franklin, the father of advertising art, made ads more readable by using large headlines and considerable white space. In fact, Franklin was the first American known to use
illustrations in ads.
The Industrializing Age
In the mid-1700s, the Industrial Revolution began in England and by the
early 1800s it had reached North America. Machinery began to replace
animal power. By using machines to mass-produce goods with uniform
quality, large companies increased their productivity. For the first time, it
cost people less to buy a product than to make it themselves. As people
left the farm to work in the city, mass urban markets began to emerge.
This further fueled market development and the growth of advertising.
By the mid-1800s, the world’s population had doubled to 1.2 billion. Suddenly, producers needed mass consumption to match the high
levels of manufactured goods. Fortunately, breakthroughs in bulk
transportation—the railroad and steamship—facilitated the sale and
distribution of products beyond a manufacturer’s local market. But
with the need for mass consumption came the increasing need for
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In 1890, N. W. Ayer & Sons became the first agency to operate
as agencies do today, planning, creating, and executing
complete ad campaigns for advertisers. This 1899 Ayer ad for
Uneeda biscuits (catch the play on words) was one of a series
of popular ads of the times.
This full-page of advertising from an
1894 Scientific American
(www.scientificamerican.com) is
historically telling in that nearly all
the ads have yet to develop any
brand identity but merely sell
unbranded commodities such as
soap, paper, paint, or services.
mass marketing techniques such as advertising to inform
new markets of the availability of products.
During this industrializing age, which lasted roughly
until the end of World War I, manufacturers were principally
concerned with production. The primary burden of marketing
fell on the wholesalers, who knew the sources of supply, the
providers of transportation, the market requirements, and
how to arrange for product shipments to the appropriate locations. They used advertising primarily as an information vehicle, placing announcements in publications called price
currents to let retailer customers know about the sources of
supply and shipping schedules for the basic, unbranded commodities they carried. Advertising to consumers was the job of
the local retailer and the large mail-order catalog companies
like Montgomery Ward and Sears Roebuck. Only a few innovative manufacturers (mostly of patent medicines, soaps,
tobacco products, and canned foods) foresaw the usefulness
of mass media advertising to stimulate consumer demand for
their products beyond their immediate market areas.
For Americans, the profession of advertising began
when Volney B. Palmer set up business in Philadelphia in
1841. He contracted with newspapers for large volumes of
advertising space at discount rates and then resold the
space to advertisers at a higher rate. The advertisers usually
prepared the ads themselves.
In 1869, at the ripe old age of 21, Francis Ayer formed an
ad agency in Philadelphia and, to make it sound more credible, named it after his father.
N. W. Ayer & Sons was the
first agency to charge a commission based on the “net cost
of space” and the first to conduct a formal market survey.
In 1890, Ayer became the first
ad agency to operate as agencies do today—planning, creating, and executing complete
ad campaigns in exchange for
media-paid commissions or
fees from advertisers. In 1892,
Ayer set up a copy department
and hired the first full-time
agency copywriter. For the
next century, Ayer was considered the oldest agency in
America, as well as one of its
largest, until 2002 when it disappeared in a merger.
The technological advances of the Industrial Revolution enabled the greatest
changes in advertising since
the 1400s. Photography, introduced in 1839, added credibility and a new world of
creativity. Now ads could
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show products, people, and places as they really were, rather than how an illustrator visualized them.
In the 1840s, some manufacturers began using magazine ads to reach the
mass market and stimulate mass consumption. Magazines became an ideal
medium because they provided national advertising and offered the best quality
reproduction.
The telegraph, telephone, typewriter, phonograph, and later, motion pictures, all let people communicate as never before. With the development of the
nationwide railroad system, the United States entered a period of spectacular
economic growth. In 1896, when the federal government inaugurated rural free
mail delivery, direct-mail advertising and mail-order selling flourished. Manufacturers now had an ever-increasing variety of products to sell and a new way to
deliver their advertisements and products to the public.
With the advent of public schooling, the nation reached an unparalleled 90
percent literacy rate. Manufacturers gained a large reading public that could
understand print ads. The United States thus entered the twentieth century as a
great industrial state with a national marketing system propelled by advertising.
With the end of World War I, the modern period in advertising emerged.
The Industrial Age
The industrial age started around the turn of the twentieth century and lasted
well into the 1970s. It was a period marked by tremendous growth and maturation of the country’s industrial base. As U.S. industry met the basic needs of
most of the population, commodity markets became saturated. Fresh mass markets then developed for new brands of consumer luxury and convenience
goods we refer to as consumer packaged goods.
During the industrializing age of the nineteenth century, wholesalers controlled the marketing process as they distributed the manufacturers’ unbranded
commodity products. When those markets became saturated, though, the
wholesalers started playing one manufacturer off against another. This hurt
manufacturers’ profits dramatically, so they started looking for ways to To differentiate their products from
wrest back control. The manufacturers changed their focus from a produc- competitors, several manufacturers branded
their products and advertised those brands
tion orientation to a sales orientation. They dedicated themselves to new aggressively. Wrigley’s spearmint gum has
product development, strengthened their own sales forces, packaged and been selling the same product, with the
branded their products, and engaged in heavy national brand advertising. same brand name, for more than a century.
Early brands of this era included Wrigley’s spearmint gum, Coca-Cola, JellO gelatin, Kellogg’s Corn Flakes, and Campbell’s soup.
In the 1920s, the United States was rich and powerful. As the war
machine returned to peacetime production, society became consumption
driven. The era of salesmanship had arrived and its bible was Scientific
Advertising, written by the legendary copywriter Claude Hopkins at Albert
Lasker’s agency, Lord & Thomas. Published in 1923, it became a classic and
was republished in 1950 and 1980. “Advertising has reached the status of a
science,” Hopkins proclaimed. “It is based on fixed principles.” His principles outlawed humor, style, literary flair, and anything that might detract
from his basic copy strategy of a preemptive product claim repeated loudly
and often.11
Radio was born at about this same time and rapidly became the
nation’s primary means of mass communication and a powerful new advertising medium with great immediacy. World and national news now arrived
direct from the scene, and a whole new array of family entertainment—
music, drama, and sports—became possible. Suddenly, national advertisers
could quickly reach huge audiences. In fact, the first radio shows were produced by their sponsors’ ad agencies.
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On October 29, 1929, the stock market crashed, the Great Depression
began, and advertising expenditures plummeted. In the face of consumer sales
resistance and corporate budget cutting, the advertising industry needed to
improve its effectiveness. It turned to research. Daniel Starch, A. C. Nielsen, and
George Gallup had founded research groups to study consumer attitudes and
preferences. By providing information on public opinion, the performance of
ad messages, and sales of advertised products, these companies started a whole
new business: the marketing research industry.
During this period, each brand sought to sell the public on its own special
qualities. Wheaties became the “Breakfast of Champions” not because of its
ingredients but because of its advertising. Manufacturers followed this strategy
of product differentiation vigorously, seeking to portray their brands as different from and better than the competition by offering consumers quality, variety, and convenience.
The greatest expansion of any medium up to that time occurred with the
introduction of television in 1941. After World War II, TV advertising grew rapidly, and in time achieved its current status as the largest advertising medium in
terms of advertising revenues.
During the postwar prosperity of the late 1940s and early 1950s, consumers
tried to climb the social ladder by buying more and more modern products.
Advertising entered its golden era. A creative revolution ensued in which ads
focused on product features that implied social acceptance, style, luxury, and
success. Giants in the field emerged—people such as Leo Burnett, David Ogilvy,
and Bill Bernbach, who built their agencies from scratch and forever changed
the way advertising was planned and created.12
Rosser Reeves of the Ted Bates Agency introduced the idea that every ad
must point out the product’s USP (unique selling proposition)—features
that would differentiate it from competitive products. The USP was a logical
extension of the Lasker and Hopkins “reason why” credo. But as the USP was
used over and over, consumers started finding it difficult to see what was
unique anymore.
Finally, as more and more imitative products showed up in the marketplace, all offering quality, variety, and convenience, the effectiveness of this
strategy wore out. Companies turned to a new mantra: market segmentation,
a process by which marketers searched for unique groups of people whose
needs could be addressed through more specialized products. The image era
of the 1960s was thus the natural culmination of the creative revolution. Advertising’s emphasis shifted from product features to brand image or personality as
advertisers sought to align their brands with particularly profitable market segments. Cadillac, for example, became the worldwide image of luxury, the consummate symbol of success, surpassed only by the aristocratic snootiness of
Rolls-Royce.
But just as me-too product features killed the product differentiation era,
me-too images eventually killed the market segmentation era. With increased
competition, a new kind of advertising strategy evolved in the 1970s, where
competitors’ strengths became just as important as the advertiser’s. Jack Trout
and Al Ries trumpeted the arrival of the positioning era. They acknowledged the
importance of product features and image, but they insisted that what really
mattered was how the brand ranked against the competition in the consumer’s
mind—how it was positioned.
Positioning proved to be an effective way to separate a particular brand
from its competitors by associating that brand with a particular set of customer
needs that ranked high on the consumer’s priority list. Thus, it became a more
effective way to use product differentiation and market segmentation. The
most famous American ads of the positioning era were Volkswagen (“Think
small”), Avis (“We’re #2”), and 7Up (“The uncola”). Product differentiation,
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Hailed by Jack Trout and Al Ries as “the most famous ad of
the 60s,” this Volkswagen ad co-opted the “small” position
in consumers’ minds, giving VW (www.volkswagen.com) a
leadership rank for many years.
In recent years, VW has attempted to recapture the style
of its 60s advertising.
market segmentation, and positioning are all very important concepts to understand, so we will discuss them further in Chapter 4.
While this was all going on in the United States, across the Atlantic a new
generation of advertising professionals had graduated from the training grounds
of Procter & Gamble (P&G) and Colgate-Palmolive and were now teaching their
international clients the secrets of mass marketing.
The Postindustrial Age
Beginning around 1980, the postindustrial age has been a period of cataclysmic change. For the first time, people became truly aware of the sensitive
environment in which we live and became alarmed by our dependence on vital
natural resources. During the acute energy shortages of the 1970s and 1980s, a
new marketing term, demarketing, appeared. Producers of energy and energyconsuming goods started using advertising to slow the demand for their products. Ads asked people to refrain from operating washers and dryers during the
day when the demand for electricity peaked. In time, demarketing became a
more aggressive strategic tool for advertisers to use against competitors, political opponents, and social problems. For example, many organizations today
actively seek to demarket the use of tobacco.
Then, following a period of unprecedented boom in the West and bust in
the East, the Berlin Wall and the Iron Curtain came tumbling down. This finally
ended the Cold War and with it the need for a defense-driven economy.
Observing the huge, new, untapped markets in the former Warsaw Pact states,
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Western financiers and marketers
rubbed their hands in glee. To
expand their power globally, big
multinational companies and their
advertising agencies went on a
binge, buying other big companies
and creating a new word in the
financial lexicon: megamerger.
By now European and Asian
advertising had caught up with the
United States. TV was suddenly the
hot medium, and agencies focused
on growth, acquisitions, and superior
creative executions. For several
years, Young & Rubicam in New
York and Dentsu in Japan alternated
as the largest advertising agency in
the world. Then two brothers in London, Charles and Maurice Saatchi,
started acquiring agencies globally.
Demarketing is used not only to dampen the demand for products but also to encourage
In rapid succession, a number of
safe use of already ubiquitous ones. This Hutchison Essar Telecom (India) outdoor ad, a
high-profile U.S. agencies disap2004 Cannes Bronze Lion winner, shows the dangers of driving while distracted by a
peared under the Saatchi & Saatchi
mobile phone.
umbrella—big companies such as
Ted Bates Worldwide and Dancer, Fitzgerald, Sample. Saatchi & Saatchi was
suddenly the largest agency in the world. Then followed more buyouts as the
big agencies from Europe, the United States, and Japan emulated the merger
mania of their huge multinational clients. Names of agency founders disappeared from the doors, replaced by initials and acronyms: WPP Group, RSCG,
TBWA, FCA, DDB Needham, and FCB, to mention just a few.13
Unfortunately, the euphoria of this period was short-lived. Sparked by
unprecedented layoffs in the defense industries, the United States, as well as
much of the world, fell into an economic recession. While it was technically
short-lived, some regions of the country felt the effects of it from the late 1980s
well into the mid-1990s. The mergers temporarily stopped, the business world
sucked in its collective belt, and management turned to new theories of Total
Quality Management (TQM), reengineering, and downsizing—theories aimed at
cutting costs and increasing efficiency, all in the name of better customer service. Two related economic factors characterized the marketing world of this
period: (1) the aging of traditional products, with a corresponding growth in
competition, and (2) the growing affluence and sophistication of the consuming
public, led by the huge baby-boomer generation.14
The most important factor was competition, intensified by lower trade barriers and growing international trade. As high profits lured imitators into the
marketplace, each offering the most attractive product features at lower cost,
consumers became the beneficiaries of more choices, higher quality, and lower
prices. The priests of positioning, Al Ries and Jack Trout, foresaw this competitive struggle in the mid-1980s. They published Marketing Warfare, which portrayed marketing as a war that businesses must be prepared to wage. Marketers
must take aim at their competitors and be prepared to defend their own turf
from would-be attackers at all times.
On the demand side, newly affluent consumers concerned themselves more
with the quality of their lives. With their basic commodity needs already met,
the baby boomers were now interested in saving time and money to spend on
more leisure-time activities or on products, services, and social causes that represented the kind of people they aspired to be.
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By the mid-1980s, an avalanche of ads—especially
in the toiletry and cosmetics industries—was aimed at
the “me” generation (“L’Oreal. Because I’m worth it.”).
At the same time, the nation’s largest industrial concerns
spent millions of dollars on corporate advertising to
extol their social consciousness and good citizenship
for cleaning up after themselves and protecting the
environment.
As the U.S. economy slowed, many companies
were chasing too few consumer dollars. Clients
trimmed their ad budgets, and many turned to more
cost-effective sales promotion alternatives, such as
coupons, direct mail, and direct marketing to build sales
volume. By 1990, advertising had lost 25 percent of its
share of the marketing budget to other forms of marketing communications.15
As the 1990s unfolded, this recession deepened.
The traditional advertising industry found itself threatened on all sides and suffering from overpopulation.16
Clients demanded better results from their promotional
dollars; small, imaginative, upstart agencies competed
for (and won) some big accounts that had never before
been available to them; TV viewers appeared immune
to conventional commercials; and an abundance of new
media options based on new technologies promised to
reinvent the very process of advertising. In three short
years, the advertising agency business lost over 13,500
jobs. Major clients such as Coca-Cola defected from the
big agencies, giving various portions of their business to
specialists in small, regional creative shops and mediabuying services. But the setback went far beyond the
agency business. Throughout the media world, newspapers, magazines, and TV networks all lost advertising In highly competitive industries, a company may benefit by going
dollars. About 40 magazines went out of business dur- head-to-head against the competition through marketing warfare. In
this ad, for instance, Lexus (www.lexus.com) attempts to distinguish
ing the two-year slump.17
itself by providing the criteria used in ranking one of its models over
By the mid-1990s, U.S. marketers had begun shift- its competitors’ as “The Finest Luxury Sedan in America.”
ing dollars back from sales promotion to advertising to
rebuild value in their brands. In 1994, ad budgets
surged ahead by 8.1 percent to $150 billion nationally. And throughout the rest
of the 1990s, ad spending increased about 7 percent every year until the year
2000, when U.S. advertisers spent $247.5 billion, a whopping 11.3 percent
increase over the previous year.18
But then the bubble burst. In 2001, the combination of a mild recession, the
collapse of the stock market, and the bust of the dot-coms all contributed to a
record decline in advertising activity. On September 11 of that year, terrorists
attacked the United States and suddenly all marketing and advertising seemed
to stop—not just in the United States, but also around the world.19 Spending in
the United States declined 6.5 percent to $231 billion, and overseas spending
dropped 8.6 percent to $210 billion.20
A year later, though, the economy seemed to be turning around and marketers were again starting to spend money on advertising. During 2003, U.S.
advertising expenditures reached $245 billion, a near-complete recovery from
the 2001 decline.21 But hardly anybody thought the problems were over. Technology, evolving lifestyles, new fears over security, and the rising cost of reaching consumers had already changed the advertising business forever. With the
explosion of the Internet, we had entered a new electronic frontier—what Tom
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Cuniff, VP/creative director at Lord, Dentsu &
Partners, called “the second creative revolution.”22
The Interactive Age: Looking
at the Twenty-first Century
The explosion of new technologies in the last
decade has affected advertising considerably.
With cable TV and satellite receivers, viewers can
watch channels devoted to single types of programming, such as straight news, home shopping, sports, or comedy. This shift transformed
television from the most widespread of mass
media to a more specialized, narrowcasting
medium.23 Now small companies and product
marketers that appeal to a limited clientele can
The recession of the early 90s slammed the advertising industry with over
use TV to reach audiences with select interests.
13,500 layoffs. However, specialists in small, regional creative shops were
A concurrent change that didn’t please
able to snatch away some large accounts during this period and produce
ads for established corporations. This Coca-Cola ad came from the clever
advertisers was the growing presence of VCRs
minds at Creative Artists Agency in Hollywood (a talent agency).
and remote controls, which allow viewers to
avoid commercials altogether by channel surfing
during breaks or simply zipping through them when watching a previously
recorded show. Advertisers and TV executives became even more upset with
the introduction of PVRs (personal video recorders) like TiVo, which allow
viewers to pause, fast-forward, and rewind live TV, store programming, and
skip commercials altogether. To its credit, TiVo never promoted the ad-skipping
feature to consumers, but it was no secret. Everybody knew.
Ironically, though, within a very short time, TiVo executives were courting marketers and agencies to join its charter advertiser program, which would let viewers
opt in to a marketer’s “advertainment” show. Best Buy bought in early and so did
Sony Pictures, Lexus, Procter & Gamble, and Miller Brewing. One of the major features of TiVo is its ability to target potential customers and measure effectiveness
New technology has created new media. TiVo initially allowed viewers to pause, fast-forward, and rewind television shows. But it was not long
until viewers could also save some shows to their PCs or burn them on DVDs. TiVo’s Web site (www.tivo.com) demonstrates how TiVo works.
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against that target. As Advertising Age pointed out, the Holy
Grail to advertisers is a one-toone relationship with consumers,
and that becomes increasingly
possible with permission-based,
opt-in, and two-way interactions
with viewers.24
Computer technology has
also had a huge impact. Personal computers, the Internet,
e-mail, and electronic bulletin
boards give advertisers new
media for reaching potential
customers. Now even the smallest companies can maintain
computer databases of customers’ names to integrate their
marketing campaigns.
What we are witnessing is
an interactive revolution. Advertising is evolving into a twoway medium where consumers
with PCs, Internet connections,
Computer technology has had an enormous impact on the ability of companies to establish and
CD-ROMs, and cable TV can maintain one-to-one relationships with their customers. Consumers can now seek out the
choose which information they advertising that provides the information they desire. Dell Computer capitalized on this
access and then spend time technology early to become the world’s largest supplier of personal computers.
researching the product information they desire.25 With interactivity, rather than zipping or zapping commercials, people actually seek them out. As we discuss in Chapter 13, this is a
revolutionary way for advertisers to reach consumers. Agencies now have the
opportunity to prove once again that advertising creativity is not about winning
awards but about helping marketers sell things.26
Advertising has come a long way from the simple sign on the bootmaker’s
shop. Today it is a powerful device that announces the availability and location
of products, describes their quality and value, imbues brands with personality,
and simultaneously defines the personalities of the people who buy them while
entertaining us. More than a reflection of society and its desires, advertising can
start and end fads, trends, and credos—sometimes all by itself.27
The endless search for competitive advantage and efficiency has made
advertising’s journey in the last 100+ years fascinating. Now companies are realizing that their most important asset is not capital equipment, or research capability, or their line of products. In the heated competition of the global
marketplace, their most important asset is their customer and the relationship
they have with that person or organization. Protecting that asset has become the
new marketing imperative for the twenty-first century. In an effort to do a better job of relationship marketing, companies are now
learning that they must be consistent in both what
they say and what they do. It’s not enough to produce
Identify the key developments that
outstanding advertising anymore. They must integrate
have taken place throughout history
all their marketing communications with everything
that have had an impact on the adverelse they do, too. That’s what integrated marketing
tising industry.
communications really means. And that will present
exciting new challenges to marketing and advertising
professionals in the immediate future.
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Society and Ethics:
The Effects of Advertising
As a social force, advertising has been a major factor in improving the standard
of living in the United States and around the world. By publicizing the material,
social, and cultural opportunities of a free enterprise society, advertising has
encouraged increased productivity by both management and labor.
With just a small amount of money, for instance, you can buy a car today. It
may be secondhand, but from advertising you know it’s available. If you earn
more money, you can buy a new car or one with more luxury features. You can
also make a statement about yourself as an individual with the vehicle you purchase. As with many products, advertising has created a personality for each
automobile make and model on the market. You, as a free individual, have the
opportunity to select the product that best matches your functional, financial, or
social needs and aspirations.
Advertising serves other social needs besides simply stimulating sales.
Newspapers, magazines, radio, television, and many Web sites all receive their
primary income from advertising. This facilitates freedom of the press and promotes more complete information. Public service announcements by a number
of advertising organizations also foster growth and understanding of important
social issues and causes. The Red Cross, Community Chest, United Way, and
other noncommercial organizations receive continuous financial support and
volunteer assistance due in large part to the power of advertising.
However, advertising is certainly not without its shortcomings. Since its
beginnings, the profession has had to struggle with issues of honesty and ethics.
In fact, in the early 1900s, the advertising profession was forced to mend its ethical ways. Consumers suffered for years from unsubstantiated product claims,
especially for patent medicines and health devices. The simmering resentment
finally boiled over into a full-blown consumer movement, which led to government regulation and ultimately to industry efforts at self-regulation.
In 1906, Congress responded to public outrage by passing the Pure Food
and Drug Act to protect the public’s health and control drug advertising. In
1914, it passed the Federal Trade Commission Act to protect the public from
unfair business practices, including misleading and deceptive advertising.
Advertising practitioners themselves formed groups to improve advertising
effectiveness and promote professionalism and started vigilance committees to
safeguard the integrity of the industry. The Association of National Advertisers
(ANA), the American Advertising Federation (AAF), and the Better Business
Bureau (BBB) are today’s outgrowths of those early groups.
But in times of economic crisis, false and misleading advertising has invariably reappeared, perhaps out of advertiser desperation. During the Depression
years, several best-selling books exposed the advertising industry as an
unscrupulous exploiter of consumers, giving birth to a new consumer movement and further government regulation.
In a 1962 message to Congress, President Kennedy asserted, “If consumers
are offered inferior products, if prices are exorbitant . . . if the consumer is unable
to choose on an informed basis, then his dollar is wasted . . . and the national
interest suffers.” In his Bill for Consumer Rights, Kennedy gave the American consumer four basic rights, including the right “to be protected against fraudulent,
deceitful or grossly misleading information, advertising, labeling, or other practices, and to be given the facts s/he needs to make an informed choice.”
In the 1970s, a new American consumer movement grew out of the widespread disillusionment following the Kennedy assassination, the Vietnam War,
the Watergate scandals, and the sudden shortage of vital natural resources—all
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communicated instantly to the world via new satellite technology. These issues
fostered cynicism and distrust of the establishment and tradition, and gave rise
to a new twist in moral consciousness. On the one hand, people justified their
personal irresponsibility and self-indulgence in the name of self-fulfillment. On
the other, they attacked corporate America’s quest for self-fulfillment (profits) in
the name of social accountability.
Today, corporate America has generally cleaned up the major inequities in
advertising. But now attention has shifted to more subtle problems of puffery,
advertising to children, the advertising of legal but unhealthful products, and advertising ethics. We believe ethics in advertising is such an
important issue that we have included features on this
topic throughout the text.
What important benefits and issues
In short, advertising has had a pronounced effect
has advertising contributed to our
on society as well as the economy. It has also fostered
society?
a host of social attitudes and laws that have dramatically affected advertising itself. We’ll take a closer
look at these issues in Chapter 2.
21
Chapter Summary
As a tool of marketing communications, advertising is the
structured and composed, nonpersonal communication of
information. It is usually paid for and usually persuasive, about
products, services, or ideas, by identified sponsors through various media.
Marketing is the process of planning and executing the
conception, pricing, distribution, and promotion of ideas,
goods, and services to create exchanges that satisfy the perceived needs, wants, and objectives of individuals and organizations. Advertising helps the organization achieve its
marketing goals. An effective advertising specialist must have a
broad understanding of the whole marketing process in order
to know what type of advertising to use in a given situation.
Companies and organizations use many different types of
advertising, depending on their particular marketing strategy.
The marketing strategy will determine who the targets of
advertising should be, in what regions the advertising should
appear, what media should be used, and what purposes the
advertising should accomplish.
In economic theory, there are four fundamental assumptions of free-market economics: self-interest, complete information, many buyers and sellers, and absence of externalities.
Given these principles, there are a number of functions and
effects of advertising in a free economy. It identifies and differentiates products; communicates information about them;
induces nonusers to try products and users to repurchase them;
stimulates products’ distribution; increases product use; builds
value, brand preference, and loyalty; and lowers the overall
cost of sales.
The greatest impact on the evolution of advertising has
been economic. In ancient times when most people could not
read or write, there was little need for advertising. Marketers
used symbols on signs to advertise their products. As the world
expanded, urban populations soared, and manufacturing and
communication technologies developed, as did advertising.
Printing was the first major technology to affect advertising;
cable TV and the Internet are the most recent.
With changing economies and increased competition,
advertising has evolved from the preindustrial age through the
industrializing and industrial ages to the postindustrial age.
Since World War II, advertisers have used a variety of strategies,
such as product differentiation, market segmentation, and
positioning, to set their products apart. Recently the advertising industry experienced a period of retrenchment and reevaluation, but the future offers new opportunities for advertisers
and agencies that can harness the interactive revolution and
develop deep relationships with their customers.
As a social force, advertising has helped improve the standard of living, both in the United States and around the world.
Advertising makes us aware of the availability of products,
imbues products with personality, and enables us to communicate information about ourselves through the products we buy.
Through its financial support, advertising also fosters the free
press and the growth of many nonprofit organizations.
However, advertising has also been severely criticized over
the years for its lack of honesty and ethics. This has given rise to
numerous consumer movements and a plethora of laws that
now regulate the practice of advertising.
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Key Terms
advertising, 4
marketing, 6
postindustrial age, 15
branding, 8
marketing communications, 4
preindustrial age, 9
consumer packaged goods, 13
marketing mix, 6
product, 5
consumers, 4
market segmentation, 14
product differentiation, 14
demarketing, 15
mass media, 5
public service announcement (PSA), 5
externalities, 7
medium, 5
sales promotion, 17
goods, 5
narrowcasting, 18
services, 5
ideas, 5
personal video recorders, 18
unique selling proposition, 14
industrial age, 13
positioning, 14
word of mouth (WOM) advertising, 5
industrializing age, 12
Review Questions
1. How does advertising for the American Cancer Society
compare with the standard definition of advertising?
6. What has been the most important influence on
advertising in the postindustrial age?
2. What are the three major functional areas of business and
which function is most closely related to advertising?
7. What are three examples of companies or organizations
that use a demarketing strategy?
3. What are the four elements that comprise a company’s
marketing strategy and how do they affect the type of
advertising a company uses?
8. What companies can you think of that are engaged in
marketing warfare?
4. What are the four fundamental assumptions of free
market economics?
5. How does advertising lower the cost of sales?
9. As a consumer, are you likely to save money buying at a
store that doesn’t advertise? Explain.
10. What is a company’s most important asset and what must
companies do to protect that asset?
Exploring Advertising
1. Collect or describe three examples of marketing
communications. Explain why you would or would not
consider each one to be an example of advertising.
2. Bring into class or describe an advertising example of
demarketing. Explain why you think the advertiser would
want to slow demand for a product.
3. Find a print ad that exemplifies several of the seven
functions and effects of advertising. Describe how the ad
addresses each one.
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